This is why Apple needs a cheaper iPhone

Apple has managed to keep the iPhone a premium brand for over a decade, but now it's time to expand into lower-priced categories.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

I've said it before and I'll say it again, if Apple wants to sell more iPhones -- and quarterly iPhone sales are the metric that many are using to measure how the Cupertino giant is performing -- then it needs to release a cheaper iPhone.

And I don't mean some hack device like the iPhone 5c or the iPhone SE.

KGI analyst Ming-Chi Kuo, who has an excellent track record when it comes to knowing where Apple is headed, sent out a note to investors claiming that Apple may be planning to release two variants of a 6.1-inch iPhone in 2018. One variant would come with dual SIM card compatibility, and the other would only support a single SIM card.

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Now that itself seems like a big departure for Apple. After all, right now there isn't a dual SIM handset in the iPhone line up. Dual SIM handsets are popular in China, and could give Apple a leg up in this highly lucrative market.

But Kuo claims that there's a bigger difference separating the two devices -- price:

6.1-inch LCD iPhone may have model that supports DSDS. If the 6.1-inch LCD iPhone comes with DSDS and single-SIM models, we believe it will result in two benefits: (1) more price segments would be created, significantly boosting shipments via the low-price single-SIM model. For instance, if the DSDS model sells for US$650-750, the single-SIM model may sell for US$550-650; and (2) the DSDS model will help increase market share in China and commercial markets.

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Here's the position that Apple is currently in. The company's health is measured in a great part by how many iPhones it can shift in a quarter, and right now sales are soggy. That puts Apple in a tough place -- try to rewrite the narrative and move the focus away from unit sales (hard to do, especially since Apple itself has been responsible for putting the focus on unit sales over the years), or try to sell more iPhones.

And one way to sell more of anything is to reduce the price. After all, it worked for the iPad.

Apple has toyed with the price of the iPhone in the past. Just as the iPhone X was an experiment in how the market would handle a $1,000+ smartphone, the iPhone 5c or the iPhone SE were experiments in how the market would respond to cheaper iPhones.

But these devices had a problem. In order to not tarnish the iPhone brand, Apple made these "budget" handsets look budget. The iPhone 5c came in comedic colors and was made of plastic, while the iPhone SE adopted an older design.

If you wanted a budget iPhone, Apple wanted everyone to know that you went for the budget model. While this was a compromise that worked for some, it didn't work for others.

Releasing a cheaper version of the iPhone that looks like the expensive one would satisfy those users who want the latest look but don't want to spend the big bucks. And there are a lot -- and I mean a lot -- of Android handsets out there in that $550 to $650 price range that are just awesome (there are handsets out there for a fraction of that price that are amazing, too), and Apple needs to acknowledge that and address it (if it wants those people to buy).

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